Plan for 'Sharia-compliant' student loans to get more Muslims into universityThe Universities Minister unveils plans for 'Sharia-compliant' student loans amid fears Muslims are being put off degree courses by the higher education finance system

A new system of "Sharia-compliant" student loans is to be launched to allow more Muslim students to go to university, it has been announced.

David Willetts, the Universities Minister, said an alternative financial model was being created to satisfy Islamic law that forbids Muslims taking out loans that make interest.

Under the system, students would apply for taxpayer-backed loans but repay them into a mutual-style fund that would be ring-fenced to provide future finance to other students with the same religious beliefs.